Auction or private sale? How property is sold in Australia's states and territories

By Bethan Smoleniec,29 September 2017| 3 min read

When it comes to buying a property at an auction or through a private sale, it’s important to be aware of the different processes and requirements. Moreover, Australian buying and selling legislation varies depending on the state and/or territory you’re in, and so as a prospective buyer, you need to be aware of how these variations will impact on you if you are successful in your purchase.

With this in mind, here we break down how to navigate auctions and private sales in each of Australia’s states and territories.

Afraid you're not getting the best home loan?

NEW SOUTH WALES

Auction:

In New South Wales, when you buy a property at an auction you should be aware that there is no cooling-off period where you can retract your offer. As a buyer, you must only make a bid if you know that you can follow through with the purchase.

Before attending the auction you should do property condition research, including gaining access to a building report, pest inspection and reviewing any other relevant documents.

If you are serious about buying, you must read the contract before the auction and make sure that you’re financially viable for either a home loan or to buy the property outright. Being aware of the maximum price you can afford to pay is essential.

On auction day you should go with enough money for the deposit, which is commonly 10% of the purchase price, so that if you are successful you are able to write the cheque.

To bid at an auction you need to register yourself as a buyer with the seller’s agent, and will then be allocated a bidding number. Make sure to review the Bidder’s Guide, so that you are aware of the identification needed to register.

If you are successful in being the highest bidder, you will then exchange contracts with the seller and then complete the sale as set out in the contract.

Private Sale:

If you are interested in buying a property, you will first be required to make an offer either verbally or in writing to the agent’s seller. Reviewing the contract before making an offer and organising your finances can help speed up the processes and confirm whether you’re eligible to be purchasing the property in the first place.

Upon your offer being successful, there will be an exchange of contracts between yourself and the seller. If you as the buyer want to make any changes to the contract, you must do this before you sign. Once you have both signed the contract and you have transferred the deposit (usually 10% of the purchase price), it becomes a legally binding agreement.

In NSW, once the contracts are signed you enter into a 5 business day cooling-off period, note that it excludes Sunday’s and public holidays. You can withdraw your offer within this period but you will be required to pay the seller 0.25% of the purchase price. However, you will be refunded your deposit in full.

Settlement will commonly take place 6 weeks after the exchange of contracts, though this can be lengthened or shortened through negotiations with the seller. On this day, you will be required to pay the remainder of the sale price and become the property's legal owner.

AUSTRALIAN CAPITAL TERRITORY (ACT)

Auction:

There is no cooling-off period in the ACT when you purchase a property at an auction so it is imperative that you are serious about buying the property. Conduct inspections so that you are familiar with its conditions and check that you have the financial backing, be it personal or from a home loan lender, to be able to follow through with the purchase.

To be eligible to bid at an auction, you need to register in advance as a potential buyer and you will receive a bidding number, but this doesn’t mean that you have to make a bid on the day. Note that if you’re buying the property with a partner, only one of you has to register.

On the day before bidding commences, make sure that you take the time to read the contract of sale and conditions of sale that should have been put on display by the auctioneer.

If you are successful in the bidding process, you will then be required to immediately sign the contract of sale for the property and pay the deposit, which can be made by a personal cheque. Check with the agent in advance to find out what way you can pay.

Settlement occurs once you pay the seller the full purchase price, and all legal and financial documents are confirmed. This makes you the legal owner of the property.

Calculate your stamp duty in seconds

Once you’ve found a property you would like to buy, you can then make an offer to the seller’s agent or directly to the seller. Make sure that your offer reflects a professional valuation of the property as well as what you can personally afford. Some agents may require you to pay a deposit with your offer (a holding deposit), but this will be returned to you in full should the seller not accept it.

If the seller accepts your offer, you are then required to both sign a contract of sale. This is when your deposit legally has to be paid and you enter into a legally binding agreement.

A cooling-off period of 5 working days will commence the following day after the exchange of contracts are signed. Within this period you are eligible as the buyer to withdraw your offer, however you will then be liable to pay 0.25% of the purchase price to the seller, which can be deducted from the deposit whilst the remainder will be refunded to you.

The sale is finalised on settlement day, once all checks have been carried out, transfer and title documents exchanged and the price of the property paid in full. The agent will be notified upon settlements completion and you will gain possession of the property.

VICTORIA

Auction:

In Victoria, like in NSW and the ACT, there is no cooling-off period if you are successful at an auction. You should check that you can afford the property and have access to enough money to make a deposit (often 10% of the purchase price) beforehand.

Before heading to the auction, you should familiarise yourself with the property and its condition as well as the property's contract. Note that a finalised version of the contract will be visible for half an hour before the bidding commences at the auction.

As a buyer, you do not have to register in advance for the auction and so anyone can show up on the day and bid.

If you are successful, you will then be required to sign the latest version of the contract that has been on display. If you would like to make any changes, you must negotiate with the vendor directly. The seller will then similarly sign, and you will have to pay the deposit, thus making the contract legally binding.

The sale is finalised upon settlement when all checks have been completed, all transfer documents have been exchange and the purchase price paid in full.

Private Sale:

In a private sale, you will make an offer either to the vendor’s agent or to the vendor themselves if they don’t have one, and should include in your offer any changes you would like to make to the contract.

If the seller accepts your offer and you both have agreed on the terms in the contract, you will then both sign it and as the buyer you will then pay the expected deposit amount.

Your cooling-off period starts once the contract is signed and you will have 3 days in which to withdraw your offer, which will result in a full refund of the deposit but mean a payment of 0.2% of the purchase price.

The property becomes legally yours upon settlement when all relevant checks have been made, both transfer and title documents exchanged and most importantly, the full purchase price paid.

Dreaming of purchasing a new home?

QUEENSLAND

Auction:

If you buy a property at auction in Queensland, you must be aware that there is no cooling-off period where you can change your mind on buying the property. Therefore before you bid make sure that you have conducted your own research on the property, are financially viable and have read the properties buying contract.

Before you attend the auction, make sure that you are aware of the deposit amount and that you can afford to pay it upfront on auction day if you are successful.

In order to bid at an auction in Queensland, you must have registered beforehand with the auctioneer, so make sure that you do this and that you have set yourself a budget as otherwise you will be forced to pay the amount regardless of whether or not you can afford it.

If you win the bid for the property you are required to sign the contract immediately, so make sure that you have read it and that no changes have been made to the contract before you engage in the bidding process.

Private Sale:

Once you find a property you would like to buy, you make an offer either verbally, by filling out a form or by completing a contract of sale provided by the agent selling the property. Do note that if you make a verbal or written offer, it will be consolidated into a contract of sale and you will have to sign it to confirm

A contract of sale outlines the price you are offering to purchase the property for, the details about when you will pay the deposit as well as a set date and time of settlement. The contract only becomes binding once both yourself as the buyer and the seller have signed it.

The deposit must be paid usually within 2-3 days of the contract becoming binding.

In Queensland, once the contract of sale has been signed by both yourself and the seller, you have a cooling-off period of 5 days whereby you can withdraw your offer. Withdrawing your offer however may require you to pay the seller 0.25% of the purchase price. However the seller is required by law to return your deposit to you within 14 days.

If you follow through with your purchase, upon settlement date you must pay the seller the full purchase price and in return you will be given title of the property, receive the keys and take full ownership of the property.

We’ve simplified the home loan process so it's faster, simpler, and the savings land in your pocket. Compare rates now.

WESTERN AUSTRALIA

Auction:

In WA you do not have to register in advance to bid at an auction, however it is recommended that before you make a bid on a property that you already have pre-finance approval and have done your research into it’s condition.

At the beginning of the auction, the auctioneer will generally read out the Auction Particulars and Conditions of Sales of Freehold Property form. Pay particular attention to this as it will become your sales contract should you be successful. It is also a good idea to access this in advance from the seller’s agent.

If the auction goes your way and your bid wins, you will then be required to immediately sign the sales contract along with the seller and will need to pay a deposit of normally 10% of the purchase price. Please note that there is no cooling-off period.

Following the auction you will also nominate a settlement agent, practising lawyer or conveyancer to carry out the land transfer and conduct, unless you wish to do it yourself. Generally, settlement will be met 30 days after the auction date when the full purchase price has been paid. Note that the exact date will be finalised in your sales contract.

Private Sale:

Most properties in Western Australia are sold using an offer and acceptance process. The first step is for you as the buyer to approach the property’s agent or the seller themselves and make an offer. It is in your own best interest to have conducted research into the property beforehand, including obtaining a Property Interest Report.

Your offer should contain how much you are willing to pay for the property, as well as any terms and conditions you would like to enforce such as implementing a cooling-off period, as otherwise they do not exist in WA. Moreover, although a deposit is not legally required, you may negotiate and include one in the contract.

If the seller accepts your offer and signs it, it then becomes the contract of sale and is a legally binding agreement.
A settlement date will be included in your sales contract and by that date you as the buyer are expected to have paid the purchase price in full and all relevant documents will have been checked and transferred, thus allowing you to become the legal owner of the property.

Got your eye on a property down the street?

NORTHERN TERRITORY

Auction:

Before auction day if you are interested in a property you should access its contract of sale and make sure that you are okay with the terms and conditions. You should also make sure that you are aware of your maximum bid price.

You will need to register to bid, and if you are successful on the day you will then have to pay the deposit and sign the contract immediately after the auction finishes. It’s important to remember that there is no cooling-off period, thus the contract is unconditional and so you must be sure that you can and want to buy the property before making a bid.

The sale is then completed on settlement day, when the buyer pays the remainder of the purchase price, and both transfer and title documents have been completed and exchanged.

Private Sale:

Like in many other states and territories, buying a property in the NT through a private sale is done via an offer and negotiation process. If the seller has an agent, you are required to make an offer in writing which will be attached to a contract of sale and sent to the seller. At this stage the contract is not yet legally binding. Some sellers will require a deposit, however the deposit will be returned to you if you are unsuccessful.

The offer will be either rejected, sent back to you with an alternate price for you to consider or accepted and the vendor will sign the contract of sale, thus making the sale legally binding. Remember that as a buyer you can also negotiate the conditions of your offer with the seller (eg. sale is subject to satisfactory pest and building inspections), but this needs to be done before the contract is signed.

Once the contract of sale has been signed by both parties, there is a 4 business day cooling-off period in which it is possible to withdraw your offer without ramifications.

The sale will be finalised on settlement day when all relevant documents are exchanged and the purchase price is paid in full by the buyer.

SOUTH AUSTRALIA

Auction:

To bid at an auction in SA, you must register, either before the auction during open inspections or on the day of the auction itself. To do this, you will need to show the auctioneer proof of identity and then you will receive the bidder’s guide, the collusive practises statement and the buyer’s information notice.

The vendor’s statement, which will become the properties contract of sale will become accessible 3 days prior to the auction and will be available for the public for at least 30 minutes before the auctions starts. Make sure that you as the buyer read it thoroughly.

If you are successful in your bid for the property, you are expected to sign the contract of sale and provide the deposit (usually 10% of the sale price) as soon as the auction terminates. There is no cooling-off period and so make sure that you are financially viable before you bid at an auction, and know your bidding limits.

The sale will be settled on a date either announced at the auction or a date that was organised between seller and bidder before the auction. Usually the settlement occurs between 30 and 90 days after the auction, and this is when the amount must be paid in full.

Private Sale:

Buying through a private sale or “private treaty” as it’s referred to in the SA requires you as the buyer to make an offer to the seller, usually through an agent, on how much you are willing to pay for the property. You may then have to negotiate with the seller to settle on a price. In some cases, they may choose to go with another buyer without ever engaging in negotiations with you.

When you are considering making an offer, it’s important to have read the buyer’s information notice beforehand, and to be aware that you may be asked to make a holding deposit of no more than $100. Whilst an offer with just your signature on it is not legally binding, once it is signed by the vendor it becomes the contract of sale, which is a legally binding document.

In SA there is a cooling-period of 2 days from the date the contract of sale is signed. You may withdraw from the sale in this period without repercussions, however you may lose the holding deposit. Once the cooling-off period ends, the buyer is expected to pay the deposit.

The settlement date will be specified in the contract of sale but is commonly 4 to 6 weeks after the contract was signed, and by this time the property must be paid for in full. Usually both seller and buyer will be represented by their legal or financial conveyancers as it is an official legal process.

TASMANIA

Auction:

In order to bid in Tasmania you do not have to pre-register and simply can show up on the day, though it is recommended that you have inspected the property and engaged in your own condition reports as sellers aren’t legally required to disclose the property’s actual condition.

There is also no cooling-off period and so, should you be successful in your bid, you are then required to go through with the buying process even if you cannot afford it, so make sure that you are serious about buying and that you have checked your financial viability in advance.

By engaging in bidding, you are accepting the terms of contract that should be on display before the auction.

If you are successful in your bid at the end of the auction, you will be required to adhere to the contract conditions, must sign the contract and pay the required deposit amount.

Settlement will occur on the date specified in the contract and on this date the property price is expected to be paid in full and relevant documents will be transferred.

Private Sale:

If you have found a property you want to buy, have carried out relevant inspection and condition reports, had the property valued and have checked your financial eligibility to pay for the property’s value, it may be time for you to make a formal offer to the agent or direct to the seller. Once the property owner receives your offer, they can choose to accept it or renegotiate a price that suits them. This can go back and forth until you both agree on a price and are happy to finalise the sale.

It is important to remember that the offer document you present to the agent/ seller will become your sales contract if it is accepted. Thus, you should make sure that you have included all relevant terms and conditions in it and that you are serious about actually buying the property, as there is no cooling-off period.

Once the contract of sales is signed by both parties, you as the buyer are required to make a deposit (usually 10% of the purchase price), however in some cases you can negotiate the amount with the seller.

A settlement date will be outlined in your contract, where solicitors representing yourself and the seller will exchange contracts and keys. On this day, the full purchase price will have been transferred to the seller, and you are able to take possession of the property.

It’s important to remember that regardless of what state or territory you are in, dummy bidding which is when you bid at an auction without the intent to actually buy the property is illegal and fines apply.

At the end of the day, whether you buy a property at an auction or through a private sale, it’s vital to know what the rules and processes are and to be aware that they vary depending on the state or territory you are purchasing in.

Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.

Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.

EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.

IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.

Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.